Within the next three years IT directors could be extracting greater value from existing hardware through a technology dubbed 'hypervisor'.
Analyst firm Butler Group defines the hypervisor is a thin layer of software that runs at the hardware level of a system. This layer of open source software allows for operating systems to run on top of it, thus fully emulating the system platform and thereby allowing multiple operating environments to run in parallel on a single system.
Butler Group has estimated that IT managers could cut their hardware costs by $5.4bn (£3bn) a year by 2008, if they spend $350m on virtualisation software.
"People will pay good money for software that will help them save $5bn a year. I am not promising you this will happen, but even if it is half right, it would still be a very good argument for virtualisation," said Andy Butler, Gartner vice-president.
"Real time infrastructure will be the next great IT battlefield," he added.
VMWare's GSX and ESX and Microsoft's Virtual Server products are among hypervisors that are currently available, but products from Trango, Ajasent, and others are emerging, according to Butler.
The front runner is Xensource's open source Xen hypervisor. Xen has gained the support of Sun, Hewlett-Packard, Novell, Red Hat, Intel, AMD and IBM, which have offered Xen support in the form of endorsements and software contributions.
Microsoft plans to release a hypervisor for Longhorn in 2007, for running multiple operating systems. Gartner said XenSource possibly poses Microsoft's greatest challenge.
Gartner vice-president Martin Reynolds said, "Xen threatens to loosen Microsoft's grip on the PC market, and open up the PC for non-MS software that runs in conjunction with Windows.
"It is like an operating system for operating systems, and it can run multiple environments simultaneously.
"Hypervisors will pervade all computing environments during the next five years, improving security, flexibility, and manageability." Reynolds said.
"Hypervisors are critical to reducing hardware management costs, drawing maximum value from IT investments and building massively scalable systems."
The software provides a step on the road to real time infrastructure (RTI), added Butler.
RTI is where a company's IT system reacts automatically to policy-based requests.
The hypervisor sits between the operating system and the hardware, but there will also be a meta operating system, acting as a virtualisation layer between applications and distributed computing resources, and offering a new layer of complexity, Butler added.